Google Ends Partnership, Clouds Future of Campus Projects
Google confirmed the termination of its partnership with Lendlease, the development partner for crucial campus sites in San Jose, Sunnyvale, and Mountain View. The projects, including Downtown West in San Jose and Moffett Park in Sunnyvale, faced an uncertain future following Google’s decision to end contracts with Lendlease. The termination, driven by shifting market dynamics, leaves the fate of these developments hanging in the balance.
“As we’ve shared before, we’ve been optimizing our real estate investments in the Bay Area, and part of that work is looking at a variety of options to move our development projects forward and deliver on our housing commitment,” said Alexa Arena, a senior director of development at Google. “We appreciate Lendlease and the work the team has done to get us to this point.”
Despite the collaboration spanning four years, Google expressed its intention to broaden relationships with new developers and capital partners to propel campus projects forward. The company’s decision, a result of a comprehensive review of real estate investments, highlighted the changing landscape that rendered the partnership “no longer mutually beneficial.”
This development adds complexity to Google’s real estate strategy, especially considering the company’s substantial cost-cutting measures. Earlier this year, Google announced significant job cuts, impacting approximately 6% of its workforce, as part of its efforts to adapt to slowing sales growth during the Covid pandemic. Smaller workforce reductions, including in real estate, have continued despite signs of growth returning.
In 2019, Google and Lendlease struck a $15 billion deal, aiming to redevelop the company’s landholdings in three locations over the next decade or more. This ambitious plan included the construction of 15,000 residential units, with 25% designated as “affordable,” addressing a critical need in an area grappling with high homelessness rates.
The once-promising Downtown West project, envisioned as a mega-campus with new housing units and public parks, now stands as a demolition zone, raising concerns about its long-term impact on the region. CNBC reported that Google’s downsizing efforts included dismantling the development team for the San Jose campus, emphasizing the challenges faced by these projects.
Despite Google’s past efforts to win over the San Jose community, including allocating more than half of its campus for public use and offering a substantial community benefits package, uncertainties loom over the future of these initiatives. San Jose Mayor Matt Mahan expressed optimism about Google’s ongoing commitment but acknowledged the need for flexibility as the company navigates evolving circumstances. The fate of these developments remains uncertain, casting a shadow over Google’s plans for the region.